2014 Closed With Light DC Plan Trading

Just
0.022% of total defined contribution (DC) plan assets traded in December 2014,
with a slight majority of days (55%) favoring equities over fixed-income
assets, Aon Hewitt data shows.

When
participants made trades, they were most likely to sell out of premixed funds,
small U.S. equity funds and company stock. The asset classes with the most
inflows for the month were large U.S. equity, international funds, and balanced
funds.

After
incorporating December’s contributions, trades, and market activity, the
overall DC participant allocation to equities increased slightly from 66.0% in
November to 66.4% in December, according to the Aon Hewitt 401(k) Index. Future
contributions to equities decreased marginally month-over-month, from 66.3% to
66.1%.

U.S.
equities posted mixed results during the last month of 2014. On the large-cap
U.S. equity front, as measured by the S&P 500 Index, returns were negative
at -0.3%. Small-cap equities outperformed their large-cap counterparts, with
the Russell 2000 Index gaining 2.9% during the month.

The
fixed-income market, as measured by the Barclays U.S. Aggregate Index, was
flat, returning 0.1%. The MSCI All Country World ex-U.S. Index, a benchmark
used to represent companies based in the developed markets outside of the U.S.,
had a poor showing in December, returning -3.6%.

Even
with the low volume of activity in December, Aon Hewitt says the last quarter
of 2014 was “easily the heaviest trading quarter of 2014,” featuring 11 of the
24 above-normal trade volume days that occurred during the year. Aon Hewitt
defines a “normal” level of relative DC account transfer activity as when the
net daily movement of participants’ balances, as a percent of total 401(k)
balances within the Aon Hewitt 401(k) Index equals between 0.3 times and 1.5
times the average daily net activity of the preceding 12 months. Slightly more
than half (52%) of all trading days for 2014 favored fixed-income funds.

The
domestic equity markets performed well during the fourth quarter, Aon Hewitt
says, as both the S&P 500 Index and the Russell 2000 Index posted positive
results, returning 4.9% and 9.7%, respectively. U.S. bonds also posted positive
results over the trailing three month period, as the Barclays Aggregate Index
gained 1.8%. The MSCI All Country World ex-U.S. Index had a volatile quarter
and returned -3.9% during the period.